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American Airlines reports better than expected Q2 profit

Article By: ,  Financial Analyst
July 24, 2015 5:36 PM

American Airlines posted better-than-expected second-quarter profit today (July 24th), as it continued to benefit from lower oil prices.

The airline company has seen its profit grow 97 per cent from the same period last year to earn $1.7 billion (£1.1 billion) in Q2 2015, compared with year-earlier profit of $864 million. Adjusted profit stood at $2.62 per share, beating the $2.58-per-share forecast from nine analysts surveyed by Zacks Investment Research.

The oversupply of oil, which caused crude prices to fall more than 50 per cent since June 2014, has been a key contributor to the company's profit increase. The carrier's fuel bill and related taxes fell to $2.1 billion in Q2 2015 compared to $3.4 billion a year earlier.

The airline previously said it will not let the low fuel prices spur it to add more seats than previously planned, or make other dramatic changes to its strategy.

$2 billion stock buyback

"Reporting the highest quarterly profit in our history is another indication that our team is on the path to restoring American as the greatest airline in the world," chief executive officer Doug Parker said in a press release.

The company also announced a $2 billion stock buyback and said it will pay a dividend of 10 cents per share next month.

However, American Airlines said that the strong US dollar has hit demand abroad for travel to the United States, with passenger revenue per available seat mile dropping 6.9 per cent in the second quarter compared with the same period in 2014.

The results come a year after American Airlines merged with US Airways to create the largest carrier in the world. The American Airlines Group saw a record profit of $2.9 billion in 2014, with a record $597 million profit in the last three months of 2014. This was the first profitable year for the airline since 2007, with the company filing for bankruptcy in 2011.

Shares of American Airlines Group Inc. rose 2.9 per cent in trading before the opening bell.

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